Housing's Contribution to Gross Domestic Product (GDP)

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Table 1

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Housing contributes to GDP in two basic ways: through private residential investment and consumption spending on housing services. Historically, residential investment has averaged roughly 5% of GDP while housing services have averaged between 12% and 13%, for a combined 17% to 18% of GDP. These shares tend to vary over the business cycle.

 

Residential investment includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes and brokers’ fees. Consumption spending on housing services includes gross rents (which include utilities) paid by renters, and owners' imputed rent (an estimate of how much it would cost to rent owner-occupied units), and utility payments. Including owners' imputed rent in GDP has been standard practice in national income accounting for a long time. Were owners' imputed rent not included, an increase in the homeownership rate would cause GDP to decline.


Table 1 reflects the categories in the "expanded detail" GDP statistics published by the U.S. Bureau of Economic Analysis.
Some of the numbers differ from previously reported results due to revisions in the consumption categories instituted by BEA in mid-2009. 
 
Table 1 shows all GDP components in real (i.e. adjusted for inflation) terms, incorporating BEA's most recent inflation-adjustment factors. This is consistent with the way GDP statistics are most often presented and discussed. "Economic growth," for example, is typically defined as the percentage change in real GDP.

 

Download and view Table 1 which shows housing’s share of both investment and consumption in the annual GDP accounts.


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